How should a dealer treat historical yield information used in advertising?

• A. Provide accurate, current yields and clearly disclose any assumptions or conditions affecting those yields.
• B. Yields may be based on historical performance with no caveats.
• C. Historical yields should never be disclosed in advertising.
• D. Yields advertised are not required to reflect current market conditions.

Answer: (A)

When presenting yields in advertising, the emphasis is on accuracy and clarity about how the yield is calculated. The dealer should provide yields that are current and bona fide and must openly disclose any assumptions or conditions that affect those yields. This keeps the information from being misleading and helps investors understand what the yield represents, including factors like the price paid, the specific yield measure used (yield to maturity, yield to call, current yield, etc.), and any reinvestment assumptions. If historical yields are used, they should be clearly labeled as historical and accompanied by explicit cautions that past performance is not indicative of future results, plus the exact time frame and the conditions under which that historical yield was achieved. The advertising must reflect current market conditions so investors aren’t led to believe the numbers are guaranteed or universally applicable.